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Buying a home with a partner or friend – what to watch for

Buying with your partner or a group of friends could help raise a bigger deposit and get you on the housing ladder but remember you could be responsible for the full mortgage if someone defaults - read our guide to find out what to look out for

How many people can jointly own a property and what rights do they have?

  • Up to four people can jointly be registered as legal co-owners of a property
  • Joint owners have a legal right to stay in their home unless a court order rules otherwise
  • If one of the owners wants to sell the property or take a loan out against its value all of the owners have to give their consent, unless a court order rules otherwise

What are the different options for joint ownership?

There are joint tenancies, which are favoured by married couples and people in civil partnerships. And there is tenancy in common, which is favoured by groups of friends or relatives who are buying together.

What does joint tenancy mean?

  • If one of the joint tenants dies the property immediately passes to the other owner. This means individual owners can’t pass what they consider ‘their share’ of the property to a beneficiary in their will. Unless the co-owners are married or in a civil partnership, inheritance tax may still be payable.
  • Joint tenants must act as one in the eyes of the law. So, individual tenants would not have the option of only mortgaging their share of the property, for example. All of the tenants would have to take out a joint mortgage

I’ve lived with my partner for years but we’re not married, we’re not joint tenants and only one of us owns the property – do we both have a claim on the property?

  • Probably not – if you’re not married the law usually doesn’t give you any claim on your partner’s money or assets but in some cases, if you have contributed to the purchase price or mortgage costs or made contributions to the upkeep of the property, a Court may find you have acquired an interest in its value
  • Similarly, if you are the owner of the property but rely on contributions to mortgage payments and utility bills from your partner (who is not a joint tenant and not married to you), he or she has no legal obligation to make those contributions and could legally stop whenever they want
  • To get around this you should seek legal advice about drawing up a legally binding cohabitation agreement
  • You can also draw up a deed of trust with a power of sale, setting out the circumstances in which the property should be sold and what would happen to the proceeds

What does tenancy in common mean?

  • Up to four people can be tenants in common for an individual property. This is a popular choice for friends or relatives who are buying together
  • Tenants in common don’t have to own equal shares of the property
  • They can each act individually, which means they can leave it to a beneficiary in their will. While in theory they have the option of mortgaging their share of the property, in reality finding a lender willing to lend in these circumstances would be difficult because the lender wouldn’t be able to enforce a sale if the mortgager defaulted

Can tenants in common take out a joint mortgage?

Yes, most lenders will allow up to four applicants to take out a joint mortgage. But when they are deciding the size of your mortgage they will usually only take into account the incomes of the two people who are paid most

What happens if I’m a joint tenant or a tenant in common and the other tenants stop meeting the mortgage payments?

  • A mortgage lender will always insist that borrowers are ‘jointly and severally’ liable. This means that if one of you stops paying his or her part of the mortgage the other (or others) will have to pay the full amount.
  • To avoid this, sit down and talk about what your plans are. Perhaps one of you wants to move in with a partner eventually, or maybe one of you has to move around with work and it wouldn’t be realistic to enter into a long-term legal arrangement and commitment
  • Each of you should seek separate independent legal advice and always draw up a legal agreement, called a declaration of trust, which establishes when and how the property can be sold and how much notice needs to be given if one of you decides to end the arrangement, whether one or more of you  has the right of first refusal to buy the share of the owner who wants to leave, and how the net sale proceeds should be divided up

This all sounds a bit risky – what are the alternatives to joint ownership?

  • Save, save and keep saving so you can afford the deposit for a mortgage alone
  • Shared ownership allows you to partly own a property without having to involve your friends or loved ones
  • The Government’s Help to Buy scheme provides loans to homebuyers, which are interest free for the first five years

And what if I do want to pursue a joint ownership – what next?

Speak to your solicitor or conveyancer dealing with the purchase of your home. They can help talk through the above options with you.

 

Please note: This guide has been fact checked by the very helpful solicitors at White & Co Solicitors, London NW1 6AD

 


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17 Comments

  1. Dear Akhona,

    If you are in a joint mortgage arrangement and then decide to own your own home separately then depending on your financial circumstances you would need to sell your jointly owned property and discharge the mortgage already in place. If you can afford to keep it and buy a new place then you would need to get a new mortgage. If you would like to find out more about your options you can seek expert fee free mortgage advice from: London & Country Mortgage Advisors

    Wish you well.

    Kind regards,

    Sophie
    HomeOwners Alliance Team

    Comment by Sophie Khan — November 17, 2016 @ 4:02 pm

  2. What if I have a joint mortgage with a relative but when I want my own house do I get it or have to wait till that other joint mortgage paid finish??

    Comment by Akhona — November 17, 2016 @ 2:20 am

  3. Hi, me and my partner are looking to rent but not sure whether it would benefit us to get a joint mortgage, just a general enquirer really

    Comment by Bethany phillips — April 13, 2016 @ 12:05 pm

  4. A friend and I are looking to buy a property together she has a larger deposit and therefore will have a greater share in the property. So how would the cost of the maintenance be split on the property, eg 70/30 as the ownership or 50/50 as we’re both living equally?

    Comment by Tracy — March 23, 2016 @ 11:58 pm

  5. I was in mental torment when I left my family home. The house is in my name and my ex partner. The kid still live there. I don’t want to return to the property. However, what are my legal rights in terms of the sale of the property in 5/10 years time? I give a good financial monthly allowance so that my younger child is able to live there. Do my legal rights diminish after a certain time passes? Thank you I would like to see this property as my investment (it says this in my will)

    Comment by Paula — March 19, 2016 @ 9:53 am

  6. Hi,
    My partner and I are planning to buy a house together with a friend who would put in around a third of the money. We will all live at the property and would not need a mortgage.
    My question as we are all getting older what would happen if any one of us had to go into a care home at some stage. Would we have to sell the house to pay for the fees or would we be able to live in the house until our demise and then when it is sold any care home fees will then be paid ?
    Thank you for any advice !

    Comment by Suzanne — March 16, 2016 @ 4:24 pm

  7. Hello
    I bought a house with my dad and brother over 10 years ago so , I moved out for work and Other purposes and had to get someone to move into my part who was also paying my part of the mortgage. Now I’m married and I want to buy another property with my wife. But it’s difficult to get one in terms of affordability as I am not seen as first time buyer and also the bank refuse to consider that I only pay part of the mortgage. My dad is refusing to sell the property or buy my part he still lives there with my part still rented.i don’t want to my Dad to court or force him but this is really affecting me from getting a property of my own.

    Comment by Ak — February 1, 2016 @ 10:59 am

  8. Hello,
    I’m currently living in a council house with my partner and our three children my partner works full time and I’m a stay at home parent. My partners name is the only one on the tenancy, he’s now applied to buy the house from the council which they have agreed to he just has to arrange the mortgage.
    Would I be allowed to be named as a joint owner as I don’t work and won’t be able to work for a while as I’m now pregnant with our 4th baby?
    Thanks

    Comment by heather — October 5, 2015 @ 4:34 pm

  9. Hi, I have my own mortgage for a property. I’m looking at buying a place with a partner, is it possible to have the two run simultaneously and rent out my property? (Obviously changing my mortgage to a rent to buy) or do I have to sell my house, or she get a place in order to keep my own mortgage?

    Comment by Daniel edwards — September 28, 2015 @ 11:48 am

  10. I have a partner and we want to buy a land it is possible that on the deed of absolute sale is in between of our names stated on that document even though we are not yet marriage?
    Thank you

    Comment by Elona — September 2, 2015 @ 10:27 am

  11. If only living with partner and I’m not working can I be put on to a mortgage? Or do I also have to be working?

    Comment by Terri ann — August 26, 2015 @ 5:03 pm

  12. I want put my Father on my mortgage so I can borrow more money, he is 60 is it possible?

    Comment by Katherine — August 3, 2015 @ 12:42 pm

  13. Hi my partner of 2 years is in a joint owner ship with he’s friend , each own 50 percent what rights do each have .

    Comment by Jessica — June 7, 2015 @ 9:22 am

  14. My estate is such that it will have to pay a considerable amount of inheritancen tax when I die. I am thinking of purchasing a second property, for use as a holiday retreat by myself and my family, and registering it as jointly owned by myself and two of my adult children as joint tenants. What would be the inheritance tax position if I died within 7 years of purchase or if I died after 7 years have elapsed? Would the IHT position be more advantageous if the property ownership was registered as tenants-in-common?

    Comment by John Dawson — May 3, 2015 @ 2:16 pm

  15. I am thinking of selling my property but just wondered if I could sell half of it to a friend to allow me to have some cash in hand then rent the property out and we would both benefit, what are the implications of this as I do own the house outright.

    Comment by Janette Howard — April 17, 2015 @ 3:13 pm

  16. Hi Gareth,

    That’s a good question. It all depends what the deed of trust says.

    We have lawyers on hand if you want to join us. http://hoa.org.uk/services/join/

    Good luck and let us know how you get on.

    Annie
    HomeOwners Alliance Team

    Comment by Annie — April 7, 2015 @ 10:51 am

  17. Hi, I recently split up with my girl friend and we ‘own’ a house together.
    The mortgage is in my name and she is not involved in the deed to the house or have her name on the mortgage, we do however have a deed of trust.
    However from what I can gather from websites is that she only has claim to half the deposit and the value of the house, does she have any legal standing living in the house as I have been asked to move out and feel a little slighted that it seems I have been effectively kicked out of my own home.
    I could really do with finding out if she has any right to the house legally or if I can ask her to move out?

    Thanks

    Gareth

    Comment by Gareth — April 3, 2015 @ 4:18 pm

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